Roberts Company is considering an investment in equipment that is capable of producing more efficiently than the current technology. The outlay required is $2,166,667. The equipment is expected to last five years and will have no salvage value. The expected cash flows associated with the project are as follows:
Year
|
Cash Revenues
|
Cash Expenses
|
1 |
$2,950,000 |
$2,300,000 |
2 |
2,950,000 |
2,300,000 |
3 |
2,950,000 |
2,300,000 |
4 |
2,950,000 |
2,300,000 |
5 |
2,950,000 |
2,300,000 |
The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems.
Required:
1.Compute the project’s payback period. If required, round your answer to two decimal places.
fill in the blank 1 years
2.Compute the project’s accounting rate of return. Enter your answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box).
fill in the blank 2 %
3.Compute the project’s net present value, assuming a required rate of return of 10 percent. When required, round your answer to the nearest dollar.
$fill in the blank 3
4.Compute the project’s internal rate of return. Enter your answers as whole percentage values.
Between fill in the blank 4 % and fill in the blank 5 %